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U.S. livestock: CME live, feeder cattle extend gains after USDA report

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– Chicago Mercantile Exchange live and feeder cattle contracts closed higher for a third straight session on Monday, partly driven by Friday’s U.S. Department of Agriculture Cattle-On-Feed report, traders said.

Initially, analysts considered the report mildly bearish because more cattle were placed in feedlots last month than forecasted.

Some analysts later said the report confirmed that overall cattle numbers will remain tight for the foreseeable future, which will underpin cash prices and sustain high beef costs.

“This is the fifth consecutive month of lower placements, and in the last three months alone feedlots have reduced overall placements by 363,000 head,” Steve Meyer and Len Steiner wrote in their Daily Livestock Report newsletter to clients.

The price strength late last week for market-ready, or cash cattle and Monday morning’s beef cutout price uptick provided more futures support.

Last Friday, a small number of cattle in Nebraska moved at $155 per hundredweight (cwt), up $2 from Thursday but down $2 from the week before (all figures US$).

Thursday cash cattle sales of $153/cwt were reported in Kansas, $1 higher than early last week but $2 lower than the prior week, feedlot sources said.

Monday morning, the government showed the choice wholesale beef price, or cutout, gained 40 cents/cwt from Friday at $250.17. Select rose 92 cents to $240.58.

Packers need to fill production for this week while grocers buy beef hand-to-mouth to feature for Labour Day cookouts, traders said.

August live cattle ended up 0.9 cent/lb. at 152.75, and October at 148.15, up 1.15 cents.

CME feeder cattle drew support from weak corn prices, live cattle market advances and tight feeder cattle supply outlook.

August closed up 1.3 cents/lb. at 217.4 cents, and September up 2.375 at 213.275 cents.

Hogs bounce, but off highs

CME hogs closed higher on short covering and traders probing for a market bottom, traders said.

Lower cash prices pulled futures from morning tops.

October closed 0.575 cent/lb. higher at 93.45 cents, and December at 88 cents, up 0.85 cent.

The morning’s average price of hogs in the Iowa/Minnesota region dropped $1.30/cwt to $93.89, USDA said.

Farmers rushed hogs to market to avoid lower trending prices for their animals as cooler-than-expected summer temperatures, prior to this week, allowed animals to grow more quickly.

Now, sultry weather, coupled with producers moving hogs ahead of time, may slow down animal weight gains which could later help cushion falling cash returns.

Wholesale pork prices could fluctuate depending on supermarket needs heading into Labour Day, a trader said.

USDA data showed the morning wholesale pork price up 11 cents/cwt from Friday to $103.71, largely supported by the $5.32 jump in pork belly costs.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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